Boost for redundancy scheme

Clay Lucas

The cost of a federal government scheme that pays workers their entitlements when companies go broke is set to soar, after new laws passed the lower house.

On Tuesday night, the Gillard government's Fair Entitlements Guarantee Bill was passed in the House of Representatives.

Workers who lose their job when a business is liquidated or goes bankrupt will be paid all of their entitlements - with no limit on how much taxpayers will have to spend picking up the tab.

The government views the change as a way to protect workers who lose their job through no fault of their own.

The move has been attacked by the federal opposition, which voted against it on Tuesday. Labor said this was proof the Coalition had ''returned to their anti-worker ways''.

But opposition workplace relations spokesman Eric Abetz said the change meant that, when businesses went broke, instead of the government just covering 16 weeks of redundancy entitlements, it would now pay for an unlimited amount.

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''It sets a standard way beyond most enterprise agreements,'' said Senator Abetz, who pointed out that the Coalition established the scheme in 2001. ''It's a good scheme - but making it open ended [is not good]. This is just going over the top.''

Senator Abetz said that Labor had pushed through the law ''at the behest of trade union bosses, who will use it … to create a new employment standard''.

''Once you start saying that [workers made redundant get] four weeks of pay for every year of service, you are saying to somebody of 30 years' service 'You are entitled to 120 weeks of redundancy pay'. The standard it sets … will mean union bosses can say 'Well, that's what even the Parliament decided'.

''This is pushing a good thing too far. It's this sort of mentality and approach that started off Greece, Spain, Portugal, Ireland,'' Senator Abetz said.

Since it was established in 2001, the federal government has spent about $1 billion on the General Employee Entitlements and Redundancy Scheme (GEERS).

GEERS - which will be renamed the Fair Entitlements Guarantee - is designed to pay the wages, annual leave and redundancy entitlements of workers that are left unmet when liquidators are called in.

Previously, only 16 weeks of redundancy entitlements were paid under the scheme.

Workplace Relations Minister Bill Shorten said the bill delivered on the government's 2010 election promise to provide greater certainty for Australian workers if their employer could not pay them the employment entitlements they were owed.

''Australian workers, who have loyally worked for companies for years, will continue to get the protections they deserve now under a statutory scheme,'' he said.

''Employees are often given little to no warning when a company goes under and this is our way of trying to ensure they are not disadvantaged through situations they have no control over,'' Mr Shorten said.

GEERS was established by Tony Abbott, the then minister for employment, after the collapse of airline Ansett and National Textiles, a business run by Stan Howard, brother of then prime minister John Howard.

The scheme has the support of both sides of politics, industry, unions and insolvency practitioners who administer payments to workers.